There is an uncomfortable fact that no-one wants to address – the state cannot afford to pay for the level of elderly care we would want for our relatives. Firstly, there is a demographic bubble in the form of the baby boom generation now retiring, leaving fewer earning and tax-paying adults to fund any state-funded care. Secondly, post retirement life expectancy has dramatically increased, with more and more of use expected to live to 90+, expectations around the quality of care provided have also risen. This is not the war-years “stiff upper lip”, “mustn’t complain” generation, this is the “go,go dancing, rock and roll generation” who have grown up with choice and plenty. Lastly, the public sector is already running an ANNUAL deficit of around £100 billion pounds, with an estimated total debt expected to pass £10 TRILION by 2015, (passing the benefits of spending onto oneself now, onto your children and grandchildren to pay, in higher taxes)
So what is the situation for elderly care right now?
Well, if you have a primary medical condition you will be covered by the NHS. The reality is that the cost of the NHS has risen from around £2200 per year in 1999 to more that £4500 per family per year today. As the elderly demographic demands more support, this is expected to double again, so this itself is a huge issue for debate. If your condition is simply being old and frail (including dementia), you usually do not get NHS funding. This is then called Social Care and is the remit of the local council.
My experience of council-funded care has not been a happy one. Firstly, if you have more than £23,250 in assets you do not quality for council-funded care. Secondly, as social-care budget are squeezed, the allocation of care has been reduced to only those with the most severe needs, leaving many “out in the cold”. In fact, many studies have shown that lower-level support provided at an earlier stage prevents hospitalisations and larger costs later, but councils generally do not consider this as saving the NHS money is not part of their remit, and besides they only look at this year’s budgets. Thirdly, they have commissioned services over many years on the basis of the cheapest price. Witness the results in the 2009 Panorama special “Britain’s Home Care Scandal”. Fourthly, even if you do qualify for support, many councils are able to charge a client a fee up to the cost of the care provided. (So you are in effect paying for the care anyway, so what not source it yourself!)
I would also urge you to read this article, where a client is being forced to use incontinence pads at night, because the local council will not fund support for her to use a commode at night. I believe this is a fundamental issue of human dignity, however this has gone to the Supreme Court and sets a dangerous precedent that local authorities can provide the level of care they want to pay for, rather than that needed by the client. Where do you think council-funded care will go from here?
So what has Dilnot proposed?
It recommends that the government sets a cap on an individual's contribution towards his or her own care costs over their lifetime, with the government meeting any costs above the cap. Dilnot suggests a range for the cap of between £25,000 and £50,000, but thinks £35,000 was the most appropriate and fair figure.
In addition, people should pay towards their living costs such as food and accommodation, but again a cap should be set on this. The commission suggests a cap of between £7,000 and £10,000 a year.
Dilnot also recommends that the means-test upper limit should be raised to £100,000 from the current £23,250, allowing people to keep more of the assets they have built up over the years.
And how much would his recommendations cost?
Dilnot’s own estimate is an additional £1.7 billion per year. I would suggest all of the factors at the start of this article would almost guarantee it will be a lot more than that. In the current climate I can’t really see how the Chancellor can progress. Despite “cross party talks”, “serious consideration” and “open debate in parliament”, I think this report may go the way of any number of similar reports into long term care funding over the last few decades, quietly shelved.
So where then?
I think there are two choices:
As a society we decide it is an important enough issue to keep it a main-stream agenda item, and commit to the huge financial outlay as a society. Or, we acknowledge that there is an individual and family responsibility at work here. Many of the baby-boomer generation are sitting in properties that have hugely appreciated in their lifetimes, but they do not wish to unlock that value to pay for their care, instead hoping to “pass it on”. Previous proposal around death taxes have been a means for the State to obtain this value, with the aim of funding a broad social elderly care system. My observations, again, are that the state is ill-equipped to provide this service, and its track record is clear, let alone the “friction” costs of collecting such taxes, employing managers and consultants etc.
Alternatively, and this is what we at Nobilis are seeing more of, is that the adult children who have a genuine concern for their parent’s welfare and are not willing to put their faith in a council-based system, but are arranging and paying for this care themselves. This allows them to preserve their parent’s house/asset if that is important, but in reality most simply want their parents to remain as comfortable as possible in their own homes with dignity. Some do this with the assistance of partial value-realisation through equity-release, while still gaining the benefits of their parents living at “home”.
While I think there will also be a real need for a “safety net” for the worse off in society, I believe the Dilnot recommendations have been naive, and leantoo far in preserving the assets of those who could afford to pay for their own care, passing on the additional costs to future generations. The assumptions of a state-run system of social care also fill me with dread, as I have seen how this path to the lowest quality/cheapest price this will provide no dignity to my parent’s generation.
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